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Kentucky Proposes Legislation Aimed at Increasing Medicaid Reimbursement Rates and PBM Oversight

Throughout the nation, independent pharmacies are facing lower and lower Medicaid reimbursement rates. These rates are making it harder for pharmacies to make ends meet as the rates often result in pharmacies being reimbursed at or less than their acquisition cost. In response to these unreasonable reimbursement rates, independent pharmacies have urged legislators, both at the state and federal level, to address the predatory reimbursement rates set by Pharmacy Benefit Managers (PBMs) through legislation. Unfortunately, progress has been remarkably slow with state and federal governments failing to remedy these abusive PBM tactics and unreasonable reimbursement rates. Recently, however, in Kentucky a bill has been passed which aims to ensure that pharmacies will be fairly reimbursed by removing PBM control over Medicaid pricing.

Senate Bill 5, sponsored by Sen. Max Wise, R-Campbellsville, strips PBM control over the State’s Medicaid pricing and requires the State’s Department for Medicaid Services (DMS) to directly administer all outpatient pharmacy benefits. Further, the bill would introduce additional disclosure requirements for PBMs, including but not limited to:

  1. All potential conflicts of interest involving the PBM
  2. PBM contracts with pharmaceutical manufacturers
  3. The percentage of claim payments made to pharmacies owned, managed, or controlled by the PBM
  4. The aggregate amount of any fees or assessments imposed by PBMs on pharmacy providers

Finally, in hopes of establishing sufficient reimbursement rates, the Bill requires DMS to establish a reasonable dispensing fee pursuant to federal guidelines.

The Bill, which enjoyed unanimous support in both the House (97-0) and Senate (37-0), awaits signature by Governor Matt Bevin. If the legislation is signed into law, Kentucky pharmacies may expect a more reasonable reimbursement for their Medicaid prescriptions without the hassles typically associated with PBM pricing.

If you are a Kentucky pharmacy being reimbursed at or below acquisition cost for Medicaid prescriptions, or for other federal programs or commercial lines, Frier Levitt can help. Whether through negotiations directly with the PBMs, litigation/arbitration with the PBMs, or lobbying efforts at the state and federal levels, Frier Levitt assists pharmacies to obtain solutions to a variety of abusive PBM practices, including unfair reimbursement practices. Contact us today to speak with an attorney.